HR Management Essay Sample on Consumer-Driven Healthcare

Consumer-Driven Healthcare

Consumer-driven healthcare is a healthcare program that allows patients to have control over their own health by purchasing health insurance plans to pay routine health care expenses directly (Metz, 2014). Consumer-driven healthcare enables citizens to cater for small health expenses while the government caters for high medical expenses. Consumer-driven healthcare has become a popular health care plan in recent years as employees seek tax advantages and cost savings in healthcare. In the US Consumer-driven healthcare has become popular after the passage of the federal law in 2003 that provides tax incentives to citizens who choose the plan. The main aim of establishing consumer-driven healthcare was to lower the health care cost for employees by inducing employees to make cost-effective choices in regard to their health (Metz, 2014).

Key Features of a Consumer-Driven Healthcare Plan

Three types of a consumer-driven health care plan are available to employees. The plans include health savings accounts (HSAs) flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). Each of the plans has it features that differentiate it from the other

Health Reimbursement Arrangements (HRAS)

In this type of plan, the employers fund the employee’s health reimbursement account with a specific sum of money, which is used to cover routine and small healthcare expense. The amount contributed to this account is not taxable to the employee hence reducing the tax burden to the employee. If an employee’s account is exhausted due to large medical expenses, the insurance plan for the employee is responsible for covering the difference. The amount funded to the account in this type of arrangement is cumulative thus; any amount that is not used by the end of the year is rolled over to subsequent years. Thus, these reduce the burden of healthcare cost to the employees (Hardie, et al., 2011).

Health Savings Account (HSA)

Health saving account is a tax-exempt account that is created to cover medical expenses for an employee and his family members. The employees are responsible for depositing a certain percentage of their salary to this account to cover for their routine health care costs and hence, they generally make cost-effective decisions. Some of the key features of this program is that they do not require employer involvement, the amount deposited in the account is not taxable, the account belongs to the employee hence the amount not used can be rolled over to subsequent years (Metz, 2014).

Flexible Spending Account (FSA)

The account allows employees to set aside a certain amount of their pay to cover for certain healthcare expenses. In this type of plan, separate accounts can be kept to cover specific medical expenses. Key features of the plan include: the amount in these accounts are not taxable, it is flexible since employees have the responsibility of setting the amount of fund to deposit in the account, the employers is not involved in employee decision, employees are reimbursed for qualified medical expenses that are not covered by insurance plan. The amount in the account cannot be rolled over subsequent years (Hardie, et al., 2011).

Advantages of Consumer-Driven Health Care Plan

In my current place of work, they offer consumer-driven health plans and as an employee, I have enrolled in the plan. There are several advantages associated with consumer-driven health care plans. One of the main advantages of the plan is that it is cost effective. The amount dedicated for healthcare is not taxable hence reducing the tax burden. The plan also allows the control of the health care expense since employees have the right to make a decision on the amount to contribute towards their own health. The amount saved in Health Savings Account and Health Reimbursement account can be accumulated to form part of the retirement benefits (Hardie, et al., 2011).

References

 Hardie, N. A., Kyanko, K., Busch, S., LoSasso, A. T., & Levin, R. A. (2011). Health literacy and health care spending and utilization in a consumer-driven health plan. Journal of health communication, 16(sup3), 308-321.

Metz, S. (2014). Consumer-Driven Health Care. Health Affairs, 33(5), 905-905.